Wednesday, July 2, 2014

Equal Pay, Part I: Protecting Women and Businesses

This entry is the first in an intended series on equal pay. This is typically cast as a women's rights issue. I think the issue affects more than just women, but the issue is debated and acted on in our political system as a Women vs. Business issue. In this first entry I am going to lay out a little of my views, and then start to take a look at the Paycheck Fairness Act.

I want to start this off by saying that I would not support a law requiring equal pay for men and women. Not because I think that wage discrimination isn't real, it is real. Not because wage discrimination is fair, because it is not. I oppose the government interfering with private businesses ability to reward employees based on performance. To assume that two individuals do equal work because they have equivalent titles is fallacious.

So I say no to telling companies what they can or cannot pay their employees.

But that does absolutely nothing to deal with a very real problem. I am sure that some of the people who do read this article, or might have read the article, are going to be turned off by the title. I know an awful lot of people think that we shouldn't be protecting businesses. But we do need to protect businesses. Without a functioning economy everybody is threatened. (As an Aside: I think that our economy is broken, I think that even though our system is routinely referred to as Capitalist, if you really look at the way that it is functioning today it is closer to Feudalistic. But this is not the entry to go into depth about my economic ideas.)

Without profits, and growth, and enterprise we do not have jobs, a tax-base, or a functioning society. Ideally we should be working toward a society where everyone has a real stake in our society. Of course half of the people in society are female, so if we are trying to work toward a system where everyone has a stake in supporting and working on our society we need to be working toward fair treatment for women.

(As and Aside: I avoid using the phrase "fair share" here deliberately. I feel that the idea of the "fair share" is like a flag. Anyone can drape it around any atrocity or injustice they care to perpetrate. The idea of the "fair share" is too big to unpack here, but I will write about it.)

There was a recent Bill (which I will be writing more about) in the US Senate that failed to pass, the Paycheck Fairness Act. The bill was not expected to pass, and really amounts to political grandstanding than an actual attempt to create change, but I think that the bill was a good one.

To quote Wikipedia: Fifty years after the [Equal Pay Act's] passage, a median wage gap still exists between men and women. According to U.S. News and World Report, the Paycheck Fairness Act is meant to close this gap by:

"making wages more transparent";

"requiring that employers prove that wage discrepancies are tied to legitimate business qualifications and not gender";

and "prohibiting companies from taking retaliatory action against employees who raise concerns about gender-based wage discrimination."[3]

As you can see, this act would not force companies to provide equal pay, but it would make it harder for them to discriminate based on gender. But those three bullet points don't really capture how the law would work. Among the things that the law would do is it would have opened companies up to civil law suits (Article). And that is very important.

One of the arguments against the Paycheck Fairness Act is that it is already illegal to discriminate based on gender, so there is no need for this law. And also that if this law were passed it would lead to an explosion of lawsuits.

Do you see the logical problem there?

It is illegal to discriminate in pay based on gender, and if this law passed there would be an explosion of lawsuits. The opposition to the act is trying to have it both ways. There is no problem, because discrimination is already illegal, but if this law passed then there would magically be an explosion of lawsuits, which would automatically be frivolous since there is no criminal activity... I don't buy it. All those lawsuits wouldn't just appear like magic, the problems are real and they already exist. Even though pay discrimination is illegal it still goes on and can't be stopped because of the way that our legal system works.

We have a number of different kinds of courts. The two that are most salient here are criminal courts and civil courts. In criminal court the defendant is innocent until proven guilty beyond a reasonable doubt. In civil court all that is usually needed is a preponderance of evidence. In civil court the level of proof needed is not as high. It is hard to prove beyond a reasonable doubt that an individual was not paid an equal amount due to discrimination. But it is pretty easy to show that large groups were being treated in a discriminatory fashion.

So if the passage of the act resulted in an explosion of successful lawsuits it would certainly indicate that crimes were being committed, but prosecution of the crimes was too difficult in criminal courts.

There is another thing to consider about the difference between criminal cases and civil cases. In a civil case, if the plaintiff wins they are awarded damages. In a criminal case the plaintiff doesn't get anything. The courts may levy a fine, or take other punitive actions, but the woman who was the victim of pay discrimination would not get any money.

It is certainly true that an "explosion of lawsuits" would certainly harm businesses. If businesses were sued for the damages caused by the past half-century of discriminatory activity it could destroy our economy. In this case it would be hard to imagine a scenario where there would not be an explosion of lawsuits... if the law worked retroactively. But our laws do not work retroactively. If businesses are only liable for current and future malfeasance then it is pretty easy to avoid being penalized for engaging in illegal activity, stop committing crimes.

There are a lot of problems with our legal system. There are a lot of problems with our political system. There are a lot of problems with our economic system. But one strength of our legal system has been the civil court's ability to effect change in the way companies conduct business. Our civil courts also create a lot of trouble, but right now lawsuits are the best weapon we have against corporate malfeasance.

The opposition to the Paycheck Fairness Act paints their opposition to the act as a defense of business. It is important to protect business, it is in all our interest to ensure a healthy economy. But from where I stand it looks like opposition to the Paycheck Fairness Act is defending businesses from paying the price for committing crimes.

(Coming Up: Equal Pay, Part II: Every Republican Senator voted against the Paycheck Fairness Act. Was that because Republicans are just evil and Democrats have nothing but high-minded ideals that drove them to bring this bill to a vote? Not so much.)

6 comments:

Well written. I agree totally with most of your points. Income inequality is a big social problem. But as a software guy I also know that it can be really hard to meddle with complex systems without achieving unintended consequences.

For example, I agree mostly with your counterargument to the "lawsuit explosion" point with one exception:

You say that companies should have the right to pay Joe more than Sally, even if they have the same job title, but only if Joe legitimately performs better than Sally, and not because of a gender difference. I completely agree. I think most people would.

According to above, The Paycheck Fairness Act would require companies to prove that Joe was given a raise (while Sally wasn't) based on "legitimate business qualifications and not gender".

I guess my sticking point is: how do you prove that?

I mean, sometimes performance is indeed measurable: Joe sold more widgets than Sally, Joe wrote more lines of code than Sally. But a lot of times, it just comes down to intangibles: Joe has deeper product knowledge than Sally, Joe engages in team meetings moreso than Sally, Joe is more often seen working late, etc.

I imagine that the people who are worried about potentially frivolous lawsuits are worried about having to prove a negative: I didn't discriminate based on gender.

How you calibrate that burden of proof isn't obvious to me. If I can just make up any old reason that vaguely sounds like a business justification, then what's the point? Then I can discriminate based on gender all day long so long as I write down something that sounds business-ey. But, on the other hand, if it's too strict and therefore I can't evaluate my employees on some of these intangibles, then that can really tie my hands.

So yeah, if I squint I can see part of the counterargument, but it's a real wrestling match: how you do balance fostering a good and flexible business environment while protecting people's right not to be discriminated against based on their gender? I have absolutely no idea. :-)

In the scenario you describe it could be difficult to prove merit differences based on intangibles prior to a lawsuit being filed. After a lawsuit is filed it wouldn't be overly difficult for a company to defend itself as long as they are above board in their pay practices. During the investigative phase of the lawsuit co-workers would be able to testify to Joe's participation in meetings, his late hours, etc. Also, by analyzing pay across the company they should find that although there are men who make more money in their positions than women counterparts, there are also women who make more money than their men counterparts. As long as everything more or less balances out the company is in the clear.

If, however, Sally was to file suit and the investigation revealed the opposite of the claims regarding Joe's participation, extra hours, etc. and they found through an examination of pay practices throughout the company that men were routinely paid more then their women counterparts, the company would be in trouble. A single person vs a single person just isn't enough to go on either way, unfortunately you need a lawsuit to open company records in order to get a true and accurate picture.

This is the crappy part. In order to defend itself the business is going to end up spending a few hundred thousand dollars before they even go to court, if they are guilty then they deserve it but when they are innocent they are still essentially being punished fiscally which hurts the business.

And even then there may be other explanations for systemwide pay differentials. I didn't want to bring up the elephant in the room, but there may be social explanations beyond the company's fault for why WidgetCorp has a pay disparity -- compelling research suggesting why can be found with only the laziest Googling.

So WidgetCorp's lawyers argues to adjust stats to account for who proactively asked for rasies and promos, or who sought job offers from competing companies, etc. Stats can be sliced and diced and clouded so much that I think even the truly at-fault could probably create enough smoke to confuse everyone.

Yeah. How to fairly separate the baddies from the goodies is totally unclear to me.

My laziest google search came up with this article that certainly seems to back you up. http://www.thedailybeast.com/articles/2014/02/01/no-women-don-t-make-less-money-than-men.html This is going to make my ongoing series on equal pay rather more difficult.

About Me

Welcome to my blog, or my blog presence, or whatever this profile exactly is. I am finally blogging after years of threatening to do so. I think that I will have a couple of blogs for various purposes... it is all very new and mysterious to me. Please bear with me as I figure out what I am doing.